MODULE 1

INTRODUCTION TO SERVICE MARKETING

OVERVIEW
The service sector is growing rapidly worldwide. Majority of developed and developing countries
experience the development of many service industries which participate significantly in the national
economic

Service are activities or benefits that one party can offer to another that are essentially intangible and do
not result in the ownership of anything. Thus we see how services are different from goods .

Perhaps it is in this context that the role of marketing is gaining importance in service organization, In this
unit you will introduced to the concept of services.

OBJECTIVES
At the end of this chapter, you are expected to :

1. Describe and define the concept of service marketing

2. Discuss the service characteristics
3. Illustrate the types of service marketing
4. Differentiate between product and services
5. Discuss the Service Economy
6. Appreciate the role of service in today’s marketplace.

DISCUSSION
Defining Services Marketing

A service is an act, deed, performance or a rendering offered by a person to another, In a literal sense a
service does not involve the transfer of any tangible commodity.

Service is integral part of human life in modern day. In the light of liberalization, privatization and
globalization, services have been commercialized and have become more professional in nature. In the
past, a service was considered as a service performed without expecting any returns (social service) ,
however over the years it has been commercialized. In the present context a service is an activity
performed by a person to another for a charge (commercial service).

The American Marketing Associations defines services as (1) activities, benefits or satisfaction
which are offered for sale, (2) are provided in connection with the sale of goods.” The services described
in the second half of the definition are those included in the sale of goods to the customer, viz., pre-sale
and after sale services., e.g. services on installation , maintenance and repairs, credit and delivery services.
 Philip Kotler defines a service as an act or performance that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. Its production may or may not be
tied to a physical product.

Zeithmal and Bitner define services as ‘deeds, processes and performances’. Here, deeds are the
actions of the service provider, processes are the steps in the provision of service, and performance is the
customer’s understanding of how the service has been delivered.

The above definitions make it very clear that, anything that comes/provided along with the
product is called services. These cannot be seen only experience as they are intangible . But without
these, tangible goods may loss value. Service add value to the goods. As there is no ownership assigned.
It cannot be transferred. Services are to be used, as most of them cannot be postponed to future period.

CHARACTERISTICS OF SERVICES MARKETING

A company must consider four special service characteristics when designing marketing
programs: intangibility, inseparability, variability and perishability.

INTANGIBILITY INSEPARABILITY

Services cannot be seen, Services cannot be

tested, felt, heard or separated from their
smelled before purchase providers

SERVICES

VARIABILITY
PERISHABILITY
Quality of services
depends on who Services cannot be stored
provides them and for later sale or use
when, where and how

Fig. 1.1

Four Service Characteristics

1. Service Intangibility – means that services cannot be seen, tasted, felt, heard, or smelled before
they bought. Consequently, a company’s promotional program must be explicit about the
benefits to be derived from the service, rather than emphasizing the service itself. Ex. People
undergoing cosmetic surgery cannot see the result before the purchase. Airline passengers have
nothing but a ticket and a promise that they and their luggage will arrive safely at the intended
destination.
 Therefore, the service provider’s task is to make the service tangible in one or more way and send
the right signals about quality. One analyst call this evidence management, in which the service
organization presents its customer with organized, honest evidence of its capabilities.

2. Service Inseparability – means that services cannot be separated from their providers, whether
the providers are people or machines. If a service employee provides the service, then the
employee becomes a part of the service. Because the customer is also present as the service is
produced, provider-customer interaction is a special feature of services marketing. Both the
provider and the customer affect the service outcome. Ex. In the case of services of a doctor to
his patient, teacher to his student the simultaneous presence of both the producer of the service
and the consumer of the service at the point of time is absolutely necessary.
3. Service variability – means that the quality of service depends on who provides them as well as
when, where, and how they are provided. Ex. A doctor treats two patients with similar ailments
on the same day. The level of satisfaction in the minds of these patients after the treatment will
never be the same. The difference is caused by factors such as the mood of the doctor, the fatigue
level of the doctor, the way the service is perceived by the individual patient. There will a
difference in the service even if the same doctor treats the same patient on two different
occasions.
4. Service Perishability – means that services cannot be stored for later sale or use. A service has to
be consumed simultaneously with its production. A service cannot be stored like a tangible
commodity. Service are perishable in terms of delivery and time. An empty seat on a plane never
can be utilized and charged after departure, Revenue once lost is lost forever.

When the service has been completely rendered to the requesting service consumer, this
particular service irreversibly vanishes as it has been consumed by the service consumer, Ex. After
the passenger has been transported to the destination, he cannot be transported to the
destination, he cannot be transported again to the previous location at the previous point in time

Types of Service Marketing

Successful service marketing requires internal marketing and interactive marketing.

1. Internal Marketing – means that the service firms must orient and motivate its customer-contact
employees and supporting service people to work as a team to provide customer satisfaction.
• For the firm to deliver consistently high service quality, Marketers must get everyone in
the organization to be customer centered.
• Internal marketing must precede external marketing
2. Interactive marketing- means that service quality depends heavily on the quality of the buyer-
seller interaction during the service encounter. Service marketers, therefore have to master
interactive marketing skills, thru training service employees in the fine art of interacting with
customers to satisfy their needs.
Service companies face three major marketing tasks:
• Competitive differentiation- this can occur by differentiating the offer, the delivery and
their images
 • Service quality – by consistently delivering higher quality than the competition, the firm
can make progress in customer retention
• Service productivity- increase productivity by training employees better. Work on quality
as well as quantity of service, Use technology to help. Firms must watch pushing
productivity at the expense of service quality
o A well designed Web site can allow customers to obtain buying information,
narrow purchase options, or make a purchase directly, saving service provider.

Company

INTERNAL EXTERNAL

Marketing Marketing

Employees Customers

INTERACTIVE
Marketing

Fig. 1.2 The Service -Profit Chain (Person Technology Centre 2010)

Product vs Service

You can begin to see the diversity of services. Services can be distinguished from goods in
several ways.

Physical Goods Services

1 Tangible Intangible

2 Homogeneous Heterogenous

3 Production and distribution are separated Production, distribution and consumption are
from consumption simultaneous processes

4 A thing An activity or process

 5 Core value produced in factory Core value produced in buyer-seller interactions

6 Customer do not participate in the production Customer participate in the production

process

7 Can be kept in stock Cannot be kept in stock

8 Transfer of ownership No transfer of ownership

Service Economy

What does a lawyer, a doctor, a wedding planner, a shoe salesman , an investment banker, a
comedian, a waitress and a college professor all have in common? They all work in the service economy.
In the simplest of terms, A Service Economy is an economy where the primary economic activity is the
provision of services rather than the production of goods.

Characteristics of Service Economy

1. Focus on service rather than manufacturing is the fundamental characteristics of service

economy.

Ex. Doctor doesn’t create medicine or medical devices but rather provides diagnosis and
treatment of injuries and disease

2. Tends to provide a great deal of opportunities for freelancers and entrepreneurs.

Sector of Service Economy

• Utilities
• Transportation and warehousing
• Information
• Finance and insurance
• Real estate and rental & leasing services
• Professional, scientific and technical services
• Management of companies and enterprises
• Educational services
• Health and social assistance
REFERENCES

Dawn Iacobucci, Marketing Management 2nd Edition , Cengage Learning, Philippine Edition

Philip Kotler, Gary Armstrong, Principles of Marketing 12th edition

Maria Victoria M. Ac-ac, Principles of Marketing Revised Edition

Service Marketing practice in:

1. Food Service – Restaurants, cafeterias and hotels

2. Hotel and Motels
3. Personal Care Services
4. Car Service Firms
5. Entertainment Services
6. Transport Services
7. Communication Services
8. Insurance Service
9. Financial Services
Assessment:

1. Service are offered only as complementary or in a package with sale of goods (False)
2. Services can be both tangible and intangible (False)
3. Customers paly an important role in delivery or service (True)
4. Service cannot be stored d
5. Services cannot be patented a
6. Difficulty in quality control of services c
7. No mass production of services b
8. Teaching is a ___ service (pure intangible)
9. Bathing soap is a pure tangible _____ (goods)
10. Clothes come under the category of____(Search)
11. Manicure and pedicure are types of ____Experience
12. Courier services are low contact services (True
13. Teaching is a high contact service (True)
14. Hair cutting service is provided by unskilled personnel (False)
15. Fast food restaurant services are high on extend of physical goods content (True)

Reference

Philip Kotler, Gary Armstrong , Principles of Marketing 14 th edition